Winnebago's (WGO) Revenues Gain On Chris-Craft Acquisition

On Dec 26, we issued an updated research report on Winnebago Industries, Inc. (NYSE:WGO) .

The company’s earnings for first-quarter fiscal 2019 came in at 70 cents per share, beating the Zacks Consensus Estimate of 57 cents. Further, revenues came in at $493.6 million, surpassing the Zacks Consensus Estimate.

Winnebago expands the company’s footprint and diversifies its portfolio in the outdoor lifestyle market through acquisitions. During the fiscal first quarter, the company closed the Chris-Craft acquisition, which has contributed to its net revenues. Earlier, the company had acquired Grand Design. These acquisitions enable it to achieve robust organic growth and impressive profitability.

During the reported quarter, the towable segment recorded a year-over-year improvement in revenues of 12.8% to $292.8 million. This upside was driven by strong organic growth across Grand Design RV and Winnebago-branded product line and pricing. Winnebago is also focused on enhancing the quality of the company’s motorhomes and expanding its business.

However, the company’s agreement to repurchase default vehicles at a reduced price from dealers has escalated its expenses. Rising input costs hurt Winnebago’s margins in the Towable segment. It also experienced year-over-year higher selling general & administrative (SG&A) expenses due to continued investments in outdoor lifestyle businesses. The company’s high debt level is also a concern.

Price Performance

Over the past three months, Winnebago’s stock has lost around 30.2% compared to the 56.1% decline recorded by the industry it belongs to.

Healthy Growth Prospects

Of late, earnings estimates for Winnebago’s fiscal 2019 have been going up. Over the past seven days, estimates for fiscal 2019 moved up 2.5% to $3.62, reflecting expected year-over-year growth of 14.9%. In addition, earnings are anticipated to register 11.5% growth in fiscal 2020.

Winnebago Industries, Inc. Price and Consensus

Zacks Rank & Stocks to Consider

Winnebago currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the auto space are Allison Transmission Holdings, Inc. (NYSE:ALSN) , Fox Factory Holding Corp. (NASDAQ:FOXF) and CarGurus, Inc. (NASDAQ:CARG) . While Allison Transmission and Fox Factory currently sport a Zacks Rank #1 (Strong Buy), CarGurus carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Allison Transmission has an expected long-term growth rate of 10%. Over the past six months, shares of the company have increased 7.3%.

Fox Factory has an expected long-term growth rate of 17.9%. Over the past six months, shares of the company have risen 21.4%.

CarGurus has an expected long-term growth rate of 5%. Over the past year, shares of the company have climbed 11.1%.

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